Payroll tax

The Internal Revenue Service provides considerable information over the Internet. The following demonstrates how useful one of its sites is in answering payroll tax questions faced by employers.+

1. Go to the site shown above.

2. Choose Publications Online.

3. Choose Circular E, Employer’s Tax Guide.

Answer each of the following questions.

(a) How does the government define employees?

(b) What are the special rules for Social Security and Medicare regarding children who are employed by their parents?

Solution: